Richest man in Babylon is a timeless personal finance book written by George S Clason.
It was first published in 1926. Yet the principles mentioned in the book is still holds true today. Applying those principles in life can take you years ahead to reach your financial goals.
Let’s look at the takeaways of richest man in babylon.
- Pay yourself first: Start paying ten percent of your income to yourself before you spend. eg:1/10th , 10/100th. The remaining 90 % percent of your income you will be using for the services you get from others.
This is the core concept of richest man in babylon book.
- Remember! We all diligently pay our grocery bills, rent/ mortgage , gas bills, Netflix payment etc. Why don’t you pay 10 percent of your income yourself first? The journey to wealth starts from saving & investing. Without the practice of saving first its impossible to achieve any of your financial dreams. So pay yourself first !
Plan of action : Next month once you receive your salary or paycheck before you pay all other expense, pay that ten percent to yourself & invest it where money can work for you.
- Live below your means: Start budgeting ! Keep a track of your daily expenses, weekly expenses & monthly. No matter how much money you make without budgeting , you will have no clue where your money went away. You could be making millions but bitter truth is without proper budgeting you will be broke sooner or later. Living below and by keeping expenses low lifestyle made many millionaires for individuals, not only their income alone.
- Next time you get a raise in your salary, don’t increase your spending instead keep your expenses as same as before you got the raise! There are six figure earners with negative networth , five figure earners with positive networth. Its not about how much money you make, its about how well you manage your spending habits.
Plan of action : Take a notepad, start writing down your upcoming monthly expenses on 25th day of pervious month. Eg: February Month expenses are planned on January month 25th date. Decide how much money you want to save & allocate expense accordingly.
Must read: Why emergency fund is important than investing?
- Be a Man of action: A man of action is favored by goddess of luck ! Most of the successful people are successful not by luck, but by taking action. If an opportunity is presented to a doer & procrastinator, chances are large that doer will be successful.
Procrastinator mind – Tell these slogans “I will do it later, next week, month and so…” But it never gets done. By Taking action your chance to get success becomes closer.
Plan of action : My favorite quote from Nike. “Just do it” !
Make money work for you: If you have followed the Rule No.1, you would have accumulated cash. Don’t make the money sit idle in a savings account. Make that money work for you. Unlike you , It doesn’t need rest , vacation etc. It works when you are sleeping, while you are in gym & spending time with your loved ones. Over the time, the money you invested multiplies. On the long run, making money becomes relatively easier.
Plan of action: Let the invested money work for you, don’t fire them(spend) after you made a quick gain. Play a long term game.
If you are new to the world of investing, you can start investing your money in index funds & allow it to grow(Just a recommendation ! not an investment advice). Others can do their due diligence before investing on individual stocks or mutual funds managed actively by fund managers.
Reading books is the one of the way to broaden your knowledge.
Richest man in Babylon is one of the best personal finance book for beginners out in the market.
The author had done such a good job by writing the book in a story format, Also in simple words to understand.
Richest man in the Babylon is a good book to start with if you consider yourself as novice.
Thank you for Reading. Good luck !